Date: 20010122
Docket: 2000-1406-EI, 2000-1407-CPP
BETWEEN:
SASKATCHEWAN DEAF AND HARD OF HEARING SERVICES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Porter, D.J.T.C.C.
[1] These appeals were heard on common evidence, by consent of the parties, at Regina, Saskatchewan on November 21, 2000.
[2] The Appellant appeals the decisions of the Minister of National Revenue (the "Minister") dated January 5, 2000, that the employment of one Patrick S. Provost (the "Worker") by the Appellant from February 15, 1999 to August 19, 1999 was both insurable under the Employment Insurance Act (the "EI Act") and pensionable under the Canada Pension Plan ("CP Plan"). The reasons given for the decisions were as follows:
"It has been decided that this employment was insurable/pensionable for the following reason: You were employed under a contract of service and therefore an employee."
The decisions were said to be issued pursuant to section 93 of the EI Act and section 27 of the CP Plan and were respectively based on paragraph 5(1)(a) of the EI Act, and paragraph 6(1)(a) of the CP Plan.
[3] The material facts reveal that the Appellant is a non-profit organization, which provides services to the deaf, late-deafened and hard of hearing persons. As part of those services, it makes provision for interpreters to be available to such persons. The worker was engaged to provide such services. The appellant maintained that his engagement, as part of a roster of interpreters which it operated, was as an independent contractor operating under a contract for services and thus not insurable or pensionable employment. The Minister has decided to the contrary that it was a contract of service and that is the issue.
The Law
[4] The manner in which the Court should go about deciding whether any particular working arrangement is a contract of service and thus an employer/employee relationship or a contract for services and thus an independent contractor relationship, has been clearly laid out by the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025. The test to be applied has been further explained by that Court in Moose Jaw Kinsmen Flying Fins Inc. v. M.N.R., 88 DTC 6099. There are, following these cases, numerous decisions of this Court, some of which have been cited by counsel, which demonstrate how these appellate guidelines have been applied. In the Moose Jaw Kinsmen Flying Fins Inc. case, above, the Federal Court of Appeal said this:
"[Analysis]
"The definitive authority on this issue in the context of the Act, is the decision of this Court in Wiebe Door Services Ltd. v. The Minister of National Revenue, 87 DTC 5025. MacGuigan J. speaking on behalf of the Court, analyzed Canadian, English and American authorities, and, in particular, referred to the four tests, for making such a determination enunciated by Lord Wright in City of Montreal v. Montreal Locomotive Works Ltd., [1974] 1 D.L.R. 161 at 169-70. He concluded at page 5028 that:
Taken thus in context, Lord Wright's fourfold test [control, ownership of tools, chance of profit, risk of loss] is a general, indeed an overarching test, which involves "examining the whole of the various elements which constitute the relationship between the parties". In his own use of the test to determine the character of the relationship in the Montreal Locomotive Works case itself, Lord Wright combines and integrates the four tests in order to seek out the meaning of the whole transaction."
At page 5029 he said:
... I interpret Lord Wright's test not as the fourfold one it is often described as being but rather as a four-in-one test with emphasis always retained on what Lord Wright, supra, calls "the combined force of the whole scheme of operations," even while the usefulness of the four subordinate criteria is acknowledged.
At page 5030 he had this to say:
What must always remain of the essence is the search for the total relationship of the parties.
He also observed "there is no escape for the trial judge, when confronted with such a problem, from carefully weighing all the facts.
... like MacGuigan J. we view the tests as being useful subordinates in weighing all of the facts relating to the operations of the Applicant. That is now the preferable and proper approach for the very good reason that in a given case, and this may well be one of them, one or more of the tests can have little or no applicability. To formulate a decision then, the overall evidence must be considered taking into account those of the tests which may be applicable and giving to all the evidence the weight which the circumstances may dictate."
[5] The nature of the tests referred to by the Court can be summarized as follows:
a) The degree or absence of control exercised by the alleged employer;
b) Ownership of tools;
c) Chance of profit and risk of loss;
d) Integration of the alleged employee's work into the alleged employer's business.
[6] I also take note of the further words of MacGuigan J., in the Wiebe case, above, where he approved the approach taken in the English courts:
"Perhaps the best synthesis found in the authorities is that of Cooke J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732, 738-9:
The observations of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes", then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him."
[7] To this I would add the words of Décary, J.A. in Charbonneau v. Canada (M.N.R.) [1996] F.C.J. No. 1337, where speaking for the Federal Court of Appeal he said this:
"The tests laid down by this Court ... are not the ingredients of a magic formula. They are guidelines which it will generally be useful to consider, but not to the point of jeopardizing the ultimate objective of the exercise, which is to determine the overall relationship between the parties. The issue is always, once it has been determined that there is a genuine contract, whether there is a relationship of subordination between the parties such that there is a contract of employment ... or, whether there is ..., such a degree of autonomy that there is a contract of enterprise or for services. ... In other words, we must not pay so much attention to the trees that we lose sight of the forest. ... The parts must give way to the whole."
[8] With respect to the second aspect of the decision of the Minister, paragraph 6(g) of the Employment Insurance Regulations reads as follows:
"6(g) employment of a person who is placed in that employment by a placement or employment agency to perform services for and under the direction and control of a client of the agency, where that person is remunerated by the agency for the performance of those services. " SOR/97-31, s.1.
[9] The Appellant also cited to the Court the case of Vulcain Alarme Inc. v. The Minister of National Revenue, 1999 249 N.R. 1 in which the Federal Court of Appeal revisited the issue. Létourneau J.A. said this:
"... These tests derived from case law are important, but it should be remembered that they cannot be allowed to compromise the ultimate purpose of the exercise, to establish in general the relationship between the parties. ... This exercise involves determining whether a relationship of subordination exists between the parties such that the Court must conclude that there was a contract of employment within the meaning of art. 2085 of the Civil Code of Quebec, or whether instead there was between them the degree of independence which characterises a contract of enterprise or for services...."
He also said later in the same Judgment:
"... A contractor who, for example, works on site on a subcontract does not serve his customers but those of the payer, that is the general contractor who has retained his services. The fact that Mr. Blouin had to report to the plaintiff's premises once a month to get his service sheets and so to learn the list of customers requiring service, and consequently the places where his services would be provided, does not make him an employee. A contractor performing work for a business has to know the places where services are required and their frequency just as an employee does under a contract of employment. Priority in performance of the work required of a worker is not the apanage of a contract of employment. Contractors or subcontractors are also often approached by various influential customers who force them to set priorities in providing their services or to comply with the customers' requirements."
He also said:
"... Although Mr. Blouin's income was calculated on an hourly basis, the number of hours of work were determined by the number of service sheets he received from the plaintiff. Mr. Blouin and his company thus had no guaranteed income. Unlike the technicians working as employees within the plaintiff's business, whose weekly salary was constant, Mr. Blouin's income fluctuated with the service calls. In fact, towards the end of his contract with the plaintiff Mr. Blouin was no longer doing the equivalent of forty hours a month as he was receiving few service sheets.
Further, Mr. Blouin, who used his own vehicle for work, had to pay the losses resulting from an accident in which he was involved and obtain another vehicle."
These comments, it seemed to me, are most pertinent to the case at bar.
The Facts
[10] The Minister was said in the Reply to the Notice of Appeal, signed on his behalf, to have relied upon the following assumptions of fact:
"(a) the facts as admitted above;
(b) the Appellant was not related to the Worker;
(c) the Appellant is a multi-lingual, multi-cultural, non-profit organization whose mission is to promote the independence of deaf, late deafened and hard of hearing persons by providing services which enhance their quality of life;
(d) the Appellant provides sign language and oral communication facilitation services, note taking services, provides information and accessibility to technical aids and devices and vocational rehabilitation counselling;
(e) the Appellant's business is not seasonal;
(f) the Appellant's regular office hours are 8:00 a.m. to 4:30 p.m. Monday to Friday;
(g) the Worker included community interpretation services ranging from Alcoholics Anonymous meetings, anger management training, information sessions, recreational interpreting and a first aid-course;
(h) the Worker worked either alone or with another interpreter;
(i) the length of time for the service would determine the number of interpreters required;
(j) the Appellant's pay scale was approved by the Board of Directors;
(k) the pay scale was as follows:
Level Hourly Wage
Entry Level (no certification) $16.50
Interpreter Graduate 18.50
Interpreting Certificate 27.50
(l) the Worker was paid $16.50 an hour and was entitled to a $1.00 an hour raise after every 250 hours of services were provided;
(m) the Worker was guaranteed a minimum payment of 1.5 hours of pay for each session;
(n) at the end of each month, the Worker would provide the Appellant with a schedule of the sessions and hours worked;
(o) the Worker was paid monthly;
(p) the Worker was paid by cheque on the 15th day of the following month;
(q) the Worker was entitled to a one hour cancellation fee if a session was cancelled within 24 hours of the appointment;
(r) the Worker was covered by the Appellant's liability insurance policy and WCB;
(s) the Worker would notify the Appellant of periods he was unable to work;
(t) the Worker performed services for the Appellant during the evenings and occasionally on the weekends;
(u) the Appellant would contact the Worker with an assignment;
(v) the Worker could not change the times of the appointments;
(w) the Appellant would provide a replacement worker when required;
(x) the work assigned to the Worker was based on his qualifiction, skill level and experience;
(y) the Worker is a member of the Association of Visual Language Interpreters of Canada ("AVLIC") and the Saskatchewan Association of Visual Language interpreters ("SAVLI");
(z) the Worker did not possess the two year diploma necessary to obtain certification;
(aa) the Worker was required to follow the code of ethics of AVLIC and SAVLI;
(bb) the Appellant's Manager of Communications made the final decisions on work allotment and what level the Worker is qualified to work at;
(cc) the Worker's services were performed away from the Appellant's premises;
(dd) the Worker performed the services personally;
(ee) clients' would contact the Appellant to arrange for an interpreter;
(ff) if the client was unhappy with the services provided the Worker would still get paid;
(gg) the Worker did not maintain a separate office;
(hh) work performed by the Worker was only monitored by the client and/or another interpreter;
(ii) the Worker did not require training;
(jj) the Worker did not require any tools in the performance of his duties;
(kk) the Worker did not charge the Appellant GST;
(ll) the Worker was not the only worker providing the same services under the same circumstances."
[11] The Appellant agreed with the following assumptions of fact: (a), (b), (c), (d), (e), (f), (g) (the Appellant said these services were included as part of their total service); (h), (i), (j), (k), (m), (n), (p), (q), (r), (s), (t), (z), (aa), (cc), (dd), (jj), (kk) and (ll).
[12] The Appellant disputed or wished to amplify or explain items (j), (l), (o), (u), (v), (w), (x), (y), (bb), (ee), (ff), (gg) (unknown); (hh), and (ii).
[13] Evidence was given by Jerry Markin, manager of communication services for the Appellant, and Patrick Provost, the worker in question.
[14] Mr. Markin was a straightforward and honest witness. I had no difficulty in accepting his evidence. He explained the nature of the organization and that, among other things, he was responsible for providing the interpreters to the consumers, that is deaf, late-deafened and hard of hearing persons throughout Saskatchewan. It is a non-profit organization with certain core funding, which they received from government. They made no charge for their services to their consumers, but if other groups or organizations wished to engage their services, there would be charges.
[15] The organization had a certain number of full-time staff employees, who were employed on a regular basis, worked regular hours and received various employee benefits. Until a few years ago, they had employed full-time staff interpreters as employees. That did not work out well for their consumers as basically, there was insufficient flexibility both as to choice of interpreter or times at which they were available to work. Thus, the organization established a roster of independent freelance persons who would be available at times they themselves specified and who were qualified and capable of delivering these services. Patrick Provost was one of these.
[16] It was clearly established between the Appellant and the worker, as in the case of the other interpreters, that they were being engaged on a freelance, independent contractor basis. Both Mr. Markin and Patrick Provost were in agreement on this. The worker was in fact engaged on a full-time basis, as an employee by a local school board at the same time.
[17] The arrangement was that if the Appellant received a request for services, sometimes for a specific interpreter and sometimes not, it would contact someone on the roster. If that person was available and agreed to take the assignment, they would take the assignment and then make their arrangements with the consumer. They were, however, paid by the Appellant at an hourly rate agreed upon ahead of time based upon their experience. They would record their time and the assignment and submit an invoice at the end of each month to the Appellant. Provided it was received before the 5th of the ensuing month, they would be paid that month. If not, they were paid the following month.
[18] There were professional standards set by professional organizations which they were required to follow.
[19] If the assignment required more than a certain number of hours, a second interpreter was assigned so that they each worked 20 minutes on and 20 minutes off. There were also different levels of assignment which related to the difficulty of the task, such as court proceedings compared to a recreational occasion.
[20] The interpreters, am I satisfied, were always free to refuse a proposed assignment if they did not wish to take it, for any reason and were not pressured or queried at all. They were quite clearly free agents in this respect. If they took an assignment and then for some reason they could not make it, they would cooperate with the Appellant in finding someone who was suitable and that person would then be paid by the Appellant.
[21] How the interpreters performed their work, within their professional standards, was very much up to them. Once the assignment had been given, the Appellant no longer was involved, save and except to make payment to the interpreter at a later date.
[22] The worker was responsible for his own travel costs within the city, his own parking, his own cell phone, and his own professional fees. There were literally no other expenses. If he was required to go out of town, he would be reimbursed for his expenses in this respect.
[23] Whilst it did not happen, the worker was free to take any other fee-paying assignments from other sources that he chose.
[24] For what it was worth, the worker was covered by a public liability insurance policy taken out and paid for by the Appellant. This policy covered their full-time staff, their freelance workers such as Provost, their volunteers and their board members. I saw nothing of significance in this.
[25] The worker was also covered by Workers' Compensation as a "freelance contractor", paid for by the Appellant. The worker received no staff benefits, nor was he required to be available at any set times. He had no reason to and did not attend at the offices of the Appellant.
[26] Complaints which were apparently few and far between, were made directly to the Appellant who may or may not have passed them on to the worker, depending upon their nature. Sometimes there were personality problems between consumers and interpreters, but there was no disciplinary process in place.
[27] Patrick Provost, when he gave evidence, confirmed his understanding of this freelance arrangement. When his full-time employment came to an end with the school board, he applied for employment insurance benefits and was told that this work also was counted as insurable employment. He said he was not only told that, but that it was insisted upon at the employment insurance office. That apparently was how this matter came about.
[28] Those are the salient facts as I have been able to discern them.
Application of the 4 Part Test to the Facts
[29] It was quite clear that the law requires the Court to look at the substance of the arrangement between the parties and not just the title. If the substance of the arrangement is not in accord with the label put upon it by the parties, it is the substance which must prevail. However, where the parties have clearly indicated to each other the nature of the contract they wish enter into and there is no compelling evidence leading to a contrary conclusion, I am of the view that the Court should give due deference to the initial intention of the parties. It is not for the Court or for the Minister to rewrite the contract entered into by the parties, absent clear evidence of the substance differs from the stated intention.
[30] Control: I must remind myself that it is not the actual control exercised by the payor which is all important in this situation, but rather the right to control. The more professional and qualified the worker, the less actual control can be anticipated and it is the right to exercise their control which must be considered.
[31] Apart from the initial assignment of the work, in the case at bar, to a person qualified to do the work, there was no control exercised by the Appellant. It simply assigned a qualified person to the consumer and that person then went about his assignment accordingly, subsequently billing the Appellant. The worker was free to take the assignment or not, and to work elsewhere or not at any time that he chose. Clearly, there was a complete lack of control and a lack of right to control in this arrangement. This aspect of the test points squarely, in my view, to a contract for services with an independent contractor.
[32] Tools and Equipment: There were no tools or equipment. The worker provided his own means of travel and his own cell phone. He paid his own professional fees and all of these items would point also to a contract for services.
[33] Profit and Loss: There was not really a chance of making a profit in an entrepreneurial sense as the affair was too small. He was simply paid an hourly rate for a service he provided and expenses were negligible. He was not in a position to lose money and simply to earn more for working more hours does not constitute a profit in the sense of this test. This aspect of the test does not really help come to a decision one way or the other.
[34] Integration: Clearly, the Appellant was in the business of providing many different services to its consumer group, of which the interpretation service was one. However, one must look at it from the point of view of the worker, not the payor. He was clearly just holding himself out as a professional interpreter to do work for clients of the Appellant as and when it suited him. As Létourneau J.A. said in the case of Vulcain (above), a contractor who, for example, works on a building site as a sub-contractor, does not serve his own customers, but those of the person paying him, that is the general contractor who has retained his services. It is no different in the case at hand. The Federal Court of Appeal in that case clearly indicated that such a factor is consistent with a contract of enterprise.
[35] In my view, this aspect of the test clearly points, in the case at hand, to a contract for services with an independent contractor. Although the worker provided services to the clientele of the Appellant in doing so, he was not enveloped into the business of the Appellant, but was retained as an outsider to provide services to their clientele. That is the distinction.
Conclusion
[36] At the end of the day, one must stand back from the individual trees and look at the forest as a whole, and must consider whether all of the evidence there was sufficient independence in an entrepreneurial sense to say that this was an independent contractor, or whether the work which was done and the manner in which it was done was so intertwined with the business of the Appellant that there was not a sufficient degree of independence.
[37] In the situation at hand, the parties expressed the clear intention to enter into a contract for services. Several aspects of the four-part test are completely consistent with this intention, and there was virtually nothing which is inconsistent with that intention. There is nothing in the evidence which, in my view, unequivocally detracts from that expressed intention to indicate in any way that this was a contract of service.
[38] In the result, I am of the view that the arrangement was indeed a contract for services with an independent contractor. The employment was thus not insurable under the EI Act nor pensionable under the Canada Pension Plan. The appeals are accordingly allowed and the decisions of the Minister are varied.
Signed at Calgary, Alberta, this 22nd day of January 2001.
"Michael H. Porter"
D.J.T.C.C.
COURT FILE NO.: 2000-1406(EI)
STYLE OF CAUSE: Saskatchewan Deaf and Hard of Hearing Services Inc. and M.N.R.
PLACE OF HEARING: Regina, Saskatchewan
DATE OF HEARING: November 21, 2000
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge M.H. Porter
DATE OF JUDGMENT: January 22, 2001
APPEARANCES:
Counsel for the Appellant: Christine Clifford
Counsel for the Respondent: Angela Evans
COUNSEL OF RECORD:
For the Appellant:
Name: Christine Clifford
Firm: Gates and Company
Regina, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE NO.: 2000-1407(CPP)
STYLE OF CAUSE: Saskatchewan Deaf and Hard of Hearing Services Inc. and M.N.R.
PLACE OF HEARING: Regina, Saskatchewan
DATE OF HEARING: November 21, 2000
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge M.H. Porter
DATE OF JUDGMENT: January 22, 2001
APPEARANCES:
Counsel for the Appellant: Christine Clifford
Counsel for the Respondent: Angela Evans
COUNSEL OF RECORD:
For the Appellant:
Name: Christine Clifford
Firm: Gates and Company
Regina, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-1406(EI)
BETWEEN:
SASKATCHEWAN DEAF AND HARD OF HEARING SERVICES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Saskatchewan Deaf and Hard of Hearing Services Inc. (2000-1407(CPP)) on November 21, 2000 at Regina, Saskatchewan, by
the Honourable Deputy Judge Michael H. Porter
Appearances
Counsel for the Appellant: Christine Clifford
Counsel for the Respondent: Angela Evans
JUDGMENT
The appeal is allowed and the decision of the Minister is vacated in accordance with the attached Reasons for Judgment.
Signed at Calgary, Alberta, this 22nd day of January 2001.
|
"M.H. Porter" |
D.J.T.C.C.
2000-1407(CPP)
BETWEEN:
SASKATCHEWAN DEAF AND HARD OF HEARING SERVICES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Saskatchewan Deaf and Hard of Hearing Services Inc. (2000-1406(EI)) on November 21, 2000 at Regina, Saskatchewan, by
the Honourable Deputy Judge Michael H. Porter
Appearances
Counsel for the Appellant: Christine Clifford
Counsel for the Respondent: Angela Evans
JUDGMENT
The appeal is allowed and the decision of the Minister is vacated in accordance with the attached Reasons for Judgment.
Signed at Calgary, Alberta, this 22nd day of January 2001.
|
"M.H. Porter" |
D.J.T.C.C.